SHARE-BASED COMPENSATION

The Company grants restricted stock, restricted stock units (“RSUs”) and stock options under the 2009 Equity Compensation Program. Share-based compensation expense of $1.0 million and $1.2 million was recognized for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was unrecognized compensation cost of $169,000 related to unvested restricted stock that is expected to be recognized over a weighted average period of approximately 0.80 years. Unrecognized compensation expense related to RSUs was approximately $3.6 million as of March 31, 2018, and that cost is expected to be recognized over a period of 1.86 years. There was no unrecognized compensation expense related to unvested stock options as of March 31, 2018.

In the first three months of 2018, the Company granted 10,945 shares of restricted stock to non-employee directors at a grant date fair value of $20.55 per share under the 2009 Equity Compensation Program. The restricted stock vests one year from the date it was granted. Compensation expense on this restricted stock is expected to be $225,000 over a one year period. In the first three months of 2017, the Company granted 13,176 shares of restricted stock to non-employee directors at a grant date fair value of $18.20 per share under the 2009 Equity Compensation Program. The restricted stock vested one year from the date it was granted. Compensation expense on this restricted stock was $240,000 over a one year period.

The following is a summary of the Company’s restricted stock activity during the three months ended March 31, 2018:



	Number of Shares		Weighted Average Price
Outstanding, January 1, 2018	22,982		$	14.44
Granted	10,945		20.55
Vested	(22,856	)	14.46
Forfeited	—		—
Outstanding, March 31, 2018	11,071		$	20.43

In the first three months of 2018, the Company granted 146,233 RSUs to certain officers at a weighted average grant date fair value of $19.11 per share under the Company’s 2009 Equity Compensation Program. These units vest within a range of two to three years. A portion of these RSUs will vest subject to certain performance conditions in the restricted stock unit agreement. There are also certain provisions in the compensation program which state that if a recipient of the RSUs reaches a certain age and years of service, the person has effectively earned a portion of the RSUs at that time. Compensation expense on the restricted stock units issued in the first three months of 2018 is expected to average approximately $932,000 per year over a three year period. In the first three months of 2017, the Company granted 115,923 RSUs at a weighted average grant date fair value of $19.97 per share under the Company’s 2009 Equity Compensation Program. Compensation expense on these restricted stock units is expected to average approximately $772,000 per year over a three year period.

The following is a summary of the Company’s RSU activity during the three months ended March 31, 2018:



	Number of Shares		Weighted Average Price
Outstanding, January 1, 2018	267,732		$	13.93
Granted	146,233		19.11
Vested	(116,921	)	13.80
Forfeited	(344	)	17.29
Outstanding, March 31, 2018	296,700		$	16.53

There were no grants of stock options in the first three months of 2018 or 2017. Option activity under the Company’s stock option plans is as follows:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding, January 1, 2018	102,216		$	8.49	4.27	$	1,101,806
Granted	—		—
Exercised	(26,250	)	9.44
Forfeited	—		—
Expired	—		—
Outstanding, March 31, 2018	75,966		$	8.16	2.88	$	889,821
Options exercisable at March 31, 2018	75,966		$	8.16	2.88	$	889,821

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options).

There were 26,250 and 30,387 stock options exercised during the first three months of 2018 and 2017, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2018 and 2017 was $297,000 and $304,000, respectively. Exercise of stock options during the first three months of 2018 and 2017, resulted in cash receipts of $248,000 and $300,000, respectively.